A coronavirus vaccine may not be beneficial for your favorite stocks

By Nigam Arora

Getty Images

We all want a safe and effective vaccine for the coronavirus. Certainly one or more effective vaccines will be good for the economy.

However, the stock market is detached from the economy. So here is the key question for investors: “How will the stock market react to the news of vaccines, not immediately but over a period of time?”

The Dow Jones Industrial Average ETF /zigman2/quotes/208954582/composite DIA -0.10% , which tracks the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.12% shows:

• It has reversed.

• It is still continuing to levitate.

• Tesla /zigman2/quotes/203558040/composite TSLA +4.03% stock, an indicator of speculative sentiment, has lost momentum. It reached a high of $1,794.99 but has since moved down to $1,550.30. This is a big move.

• Amazon /zigman2/quotes/210331248/composite AMZN +0.05% , the poster child of stocks benefiting from the coronavirus-led economic lockdown, has fallen from $3,344.29 to $2,991.12 as of this writing. This is a big move and shows loss of momentum, just like Tesla stock has.

• Netflix /zigman2/quotes/202353025/composite NFLX -1.48% stock, the beneficiary of people staying at home watching more video, has moved down since the reversal day from $575.37 to $490.89. Again, this is a big move showing loss of momentum.

• The same is true of fast-growth companies Zoom Video /zigman2/quotes/211319643/composite ZM +2.20% , Fastly /zigman2/quotes/212251938/composite FSLY +1.87% , Peloton /zigman2/quotes/208035743/composite PTON -1.63% and DocuSign /zigman2/quotes/205992027/composite DOCU -4.21% .

• Among popular tech stocks, Apple /zigman2/quotes/202934861/composite AAPL +2.77% and Microsoft /zigman2/quotes/207732364/composite MSFT +1.58% are also showing loss of momentum but to a lesser degree. Alphabet /zigman2/quotes/205453964/composite GOOG -0.09%   /zigman2/quotes/202490156/composite GOOGL +0.09% and Facebook /zigman2/quotes/205064656/composite FB +1.28% have been more resilient to momentum loss.

• Moderna /zigman2/quotes/205619834/composite MRNA +12.20% , AstraZeneca /zigman2/quotes/200304487/composite AZN +1.43% , Pfizer /zigman2/quotes/202877789/composite PFE +2.00% , BioNTech /zigman2/quotes/214419716/composite BNTX +2.00% , Novavax /zigman2/quotes/202614340/composite NVAX +3.53% and Inovio Pharmaceuticals /zigman2/quotes/202993817/composite INO +8.00% — all coronavirus vaccine stocks — have gained momentum.

What does it mean?

The conclusion to be drawn from investor behavior so far is that popular stocks are stretched to the upside. When there is good news about a vaccine, popular stocks may lose more momentum and fall over a period of time.

Don’t let the initial reaction fool you. Initially, money will flow into futures and ETFs, boosting stocks. Main Street stocks that have been hurt may benefit. These include Carnival /zigman2/quotes/202325446/composite CCL -4.95% , American Airlines /zigman2/quotes/209207041/composite AAL -2.47% and Cheesecake Factory /zigman2/quotes/207909209/composite CAKE +6.21% . As a note of caution, these stocks should be bought only on dips in buy zones, when signals are given or on other news in a properly diversified portfolio. Please read, “Here’s the secret sauce to handle the stock market’s election and virus fears.”

Disclosure: Arora Report portfolios have positions in Apple, Amazon, Alphabet, Microsoft and Facebook. Nigam Arora is the founder of The Arora Report, which publishes four newsletters. He can be reached at Nigam@TheAroraReport.com.

/zigman2/quotes/208954582/composite

Add to watchlist DIA

SPDR Dow Jones Industrial Average ETF Trust

US : U.S.: NYSE Arca

$ 309.65

-0.32 -0.10%

Volume: 4.55M

Jan. 25, 2021 8:00p

/zigman2/quotes/210598065/realtime

Add to watchlist DJIA

Dow Jones Industrial Average

US : Dow Jones Global

30,960.00

-36.98 -0.12%

Volume: 477.35M

Jan. 25, 2021 5:15p

/zigman2/quotes/203558040/composite

Add to watchlist TSLA

Tesla Inc.

US : U.S.: Nasdaq

$ 880.80

+34.16 +4.03%

Volume: 41.17M

Jan. 25, 2021 4:00p

P/E Ratio

1,760

Dividend Yield

N/A

Market Cap

$802.53 billion

Rev. per Employee

$511,871

/zigman2/quotes/210331248/composite

Add to watchlist AMZN

Amazon.com Inc.

US : U.S.: Nasdaq

$ 3,294.00

+1.77 +0.05%

Volume: 3.75M

Jan. 25, 2021 4:00p

P/E Ratio

96.47

Dividend Yield

N/A

Market Cap

$1651.88 billion

Rev. per Employee

$351,531

/zigman2/quotes/202353025/composite

Add to watchlist NFLX

Netflix Inc.

US : U.S.: Nasdaq

$ 556.78

-8.39 -1.48%

Volume: 7.21M

Jan. 25, 2021 4:00p

P/E Ratio

91.58

Dividend Yield

N/A

Market Cap

$249.69 billion

Rev. per Employee

N/A

/zigman2/quotes/211319643/composite

Add to watchlist ZM

Zoom Video Communications Inc.

US : U.S.: Nasdaq

$ 391.83

+8.43 +2.20%

Volume: 5.18M

Jan. 25, 2021 4:00p

P/E Ratio

273.62

Dividend Yield

N/A

Market Cap

$111.91 billion

Rev. per Employee

$245,915

/zigman2/quotes/212251938/composite

Add to watchlist FSLY

Fastly Inc. Cl A

US : U.S.: NYSE

$ 105.21

+1.93 +1.87%

Volume: 6.50M

Jan. 25, 2021 4:00p

P/E Ratio

N/A

Dividend Yield

N/A

Market Cap

$11.72 billion

Rev. per Employee

$318,194

/zigman2/quotes/208035743/composite

Add to watchlist PTON

Peloton Interactive Inc.

US : U.S.: Nasdaq

$ 157.14

-2.61 -1.63%

Volume: 6.61M

Jan. 25, 2021 4:00p

P/E Ratio

2,068

Dividend Yield

N/A

Market Cap

$46.73 billion

Rev. per Employee

$494,288

/zigman2/quotes/205992027/composite

Add to watchlist DOCU

DocuSign Inc.

US : U.S.: Nasdaq

$ 244.40

-10.75 -4.21%

Volume: 4.20M

Jan. 25, 2021 4:00p

P/E Ratio

N/A

Dividend Yield

N/A

Market Cap

$47.60 billion

Rev. per Employee

$249,161

/zigman2/quotes/202934861/composite

Add to watchlist AAPL

Apple Inc.

US : U.S.: Nasdaq

$ 142.92

+3.85 +2.77%

Volume: 157.61M

Jan. 25, 2021 4:00p

P/E Ratio

43.75

Dividend Yield

0.57%

Market Cap

$2339.61 billion

Rev. per Employee

$1.86M

/zigman2/quotes/207732364/composite

Add to watchlist MSFT

Microsoft Corp.

US : U.S.: Nasdaq

$ 229.53

+3.58 +1.58%

Volume: 33.15M

Jan. 25, 2021 4:00p

P/E Ratio

37.03

Dividend Yield

0.98%

Market Cap

$1708.29 billion

Rev. per Employee

$877,393

/zigman2/quotes/205453964/composite

Add to watchlist GOOG

Alphabet Inc. Cl C

US : U.S.: Nasdaq

$ 1,899.40

-1.65 -0.09%

Volume: 1.93M

Jan. 25, 2021 4:00p

P/E Ratio

37.93

Dividend Yield

N/A

Market Cap

$1282.98 billion

Rev. per Employee

$1.36M

/zigman2/quotes/202490156/composite

Add to watchlist GOOGL

Alphabet Inc. Cl A

US : U.S.: Nasdaq

$ 1,894.28

+1.72 +0.09%

Volume: 2.53M

Jan. 25, 2021 4:15p

P/E Ratio

37.83

Dividend Yield

N/A

Market Cap

$1282.98 billion

Rev. per Employee

$1.36M

/zigman2/quotes/205064656/composite

Add to watchlist FB

Facebook Inc. Cl A

US : U.S.: Nasdaq

$ 278.01

+3.51 +1.28%

Volume: 19.09M

Jan. 25, 2021 4:00p

P/E Ratio

31.66

Dividend Yield

N/A

Market Cap

$781.86 billion

Rev. per Employee

$1.57M

/zigman2/quotes/205619834/composite

Add to watchlist MRNA

Moderna Inc.

US : U.S.: Nasdaq

$ 147.00

+15.98 +12.20%

Volume: 26.97M

Jan. 25, 2021 4:15p

P/E Ratio

N/A

Dividend Yield

N/A

Market Cap

$51.85 billion

Rev. per Employee

$72,541

/zigman2/quotes/200304487/composite

Add to watchlist AZN

AstraZeneca PLC ADR

US : U.S.: Nasdaq

$ 54.01

+0.76 +1.43%

Volume: 13.74M

Jan. 25, 2021 4:00p

P/E Ratio

56.38

Dividend Yield

2.54%

Market Cap

$139.57 billion

Rev. per Employee

$346,812

/zigman2/quotes/202877789/composite

Add to watchlist PFE

Pfizer Inc.

US : U.S.: NYSE

$ 37.28

+0.73 +2.00%

Volume: 31.73M

Jan. 25, 2021 4:02p

P/E Ratio

24.14

Dividend Yield

4.18%

Market Cap

$203.16 billion

Rev. per Employee

$586,070

/zigman2/quotes/214419716/composite

Add to watchlist BNTX

BioNTech SE ADR

US : U.S.: Nasdaq

$ 110.61

+2.17 +2.00%

Volume: 2.88M

Jan. 25, 2021 4:00p

P/E Ratio

N/A

Dividend Yield

N/A

Market Cap

$26.11 billion

Rev. per Employee

$92,777

/zigman2/quotes/202614340/composite

Add to watchlist NVAX

Novavax Inc.

US : U.S.: Nasdaq

$ 131.46

+4.48 +3.53%

Volume: 3.01M

Jan. 25, 2021 4:00p

P/E Ratio

N/A

Dividend Yield

N/A

Market Cap

$8.08 billion

Rev. per Employee

$113,103

/zigman2/quotes/202993817/composite

Add to watchlist INO

Inovio Pharmaceuticals Inc.

US : U.S.: Nasdaq

$ 9.72

+0.72 +8.00%

Volume: 19.38M

Jan. 25, 2021 4:00p

P/E Ratio

N/A

Dividend Yield

N/A

Market Cap

$1.84 billion

Rev. per Employee

$21,196

/zigman2/quotes/202325446/composite

Add to watchlist CCL

Carnival Corp.

US : U.S.: NYSE

$ 19.22

-1.00 -4.95%

Volume: 55.84M

Jan. 25, 2021 4:00p

P/E Ratio

N/A

Dividend Yield

0.00%

Market Cap

$18.90 billion

Rev. per Employee

N/A

/zigman2/quotes/209207041/composite

Add to watchlist AAL

American Airlines Group Inc.

US : U.S.: Nasdaq

$ 15.43

-0.39 -2.47%

Volume: 61.95M

Jan. 25, 2021 4:00p

P/E Ratio

N/A

Dividend Yield

0.00%

Market Cap

$9.57 billion

Rev. per Employee

$342,319

/zigman2/quotes/207909209/composite

Add to watchlist CAKE

Cheesecake Factory Inc.

US : U.S.: Nasdaq

$ 44.99

+2.63 +6.21%

Volume: 1.80M

Jan. 25, 2021 4:00p

P/E Ratio

N/A

Dividend Yield

0.00%

Market Cap

$1.93 billion

Rev. per Employee

$53,680